Netflix, Facebook and Google will probably have a new tax to pay in South Africa, which will hit consumers

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• The National Treasury will now require US multinationals providing services in South Africa to pay VAT.
• This means that companies such as Netflix, Facebook and Google will have to register for VAT and pay the VAT rate of 15%.
• A lawyer believes that the new regulations will likely result in higher prices for consumers.

Various US multinationals such as Netflix, Facebook and Google will soon be forced to pay Value Added Tax (VAT) in South Africa.

Following the publication by the National Treasury of new regulations specifically for electronic services, the term "electronic services" has been extended to "all services provided by means of an electronic agent, electronic communication or the Internet". any price whatsoever ".

This means that all electronic services provided by another country in South Africa, such as online advertising, online courses, online consulting services, software subscriptions, website hosting , streaming services, online games, podcasts and publications, will be subject to a VAT of 15%. Natalie Macdonald Govender, an badociate at Bisset Boehmke McBlain lawyers, said.

Educational services provided by an approved body will, however, be exempt from VAT.

The regulation will come into force on April 1, 2019.

Companies such as Netflix, Facebook and Google will now need to register for VAT in South Africa, if they have not done so yet, as well as VAT accounting or lawsuits, said Govender.

The burden of additional VAT will probably be borne by the consumer in the same way as the sugar tax, which has led to an increase in prices, she said.

"Of course, foreign service providers may not expect, ideally, to reduce their profits, but will likely increase their prices (such as subscription fees, etc.) to help recover some of the benefits. benefits that could be lost in case of loss. VAT, "Govender told Business Insider South Africa.

According to her, tax authorities around the world are increasingly using advanced technologies to facilitate revenue collection and identify fraudsters.

"In some cases, countries agree to cooperate (including through exchange of information about taxpayers) and exchange information between them."

"The technology is also improving, it will be easier for non-compliant entities to be identified."

Govender said companies that do not register and pay VAT, if any, will be subject to penalties and interest.

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